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Carve Out Law and Legal Definition

Carve out, in the business context, refers to a partial spinoff of
a company. It is a situation in which a parent company sells a minority
share of a child company, usually in an IPO, while retaining the rest.
The child company will have its own board of directors and financial statements,
but will benefit from the parent company's resources and strategic support.
Usually, the parent company will eventually sell the rest of the child
company in the open market.

In the labor context, carve out refers to establishing a separate bargaining
unit with employees who previously were included in a larger unit. Generally,
this practice is prohibited whenever an ongoing effective and productive
relationship between the already established larger unit and management
are found to exist.